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S7787 - Summary

S7787 - Sponsor Memo

BILL NUMBER:S7787
TITLE OF BILL:
An act to amend the insurance law, in relation to limits on certain
supplementary insurance; and in relation to payments to durable
medical equipment providers
PURPOSE:
The purpose of this bill is to provide for increased SUM coverage and
to allow the Superintendent of Financial Services to decertify
providers of durable medical equipment from providing services under
no-fault.
SUMMARY OF PROVISIONS:
This bill would change the required amount of supplementary
uninsurediunderinsured motorist (SUM) coverage from a maximum amount
that is the same as bodily injury to a minimum amount that is the same
as bodily injury, In addition, this bill would automatically require
the purchase of SUM coverage but also give the insured the option
decline SUM coverage or to purchase lower amounts than the statutory
minimum. The insurer or agent would be required to disclose to the
insured what SUM coverage is and how much the insured may purchase. If
the insured declines to purchase SUM coverage, he or she must
acknowledge the declination in writing.
In addition, this bill would allow the Superintendent, after notice

and hearing, to prohibit a fraudulent provider of durable medical
equipment from demanding or requesting payment under the no-fault law.
JUSTIFICATION:
This bill would amend the insurance law in relation to unknowingly
waiving supplementary insurance coverage. Supplementary insurance,
also known as uninsured or underinsured motorist insurance, protects
motorists who suffer severe and devastating injuries in accidents with
drivers who carry inadequate or no insurance. Few drivers are aware of
the value of supplementary insurance and insurance companies rarely
offer supplementary insurance coverage above the statutory minimum.
This bill will ensure that drivers are fully protected by
supplementary insurance, equal to the bodily injury liability
insurance coverage they select, unless they affirmatively elect lower
coverage.
The bill also allows the superintendent of financial services to
establish a mechanism to decertify providers of durable medical
equipment from the no-fault system if they have engaged in fraudulent
activities or billing practices. This is similar to provisions of the
insurance law enacted in 2005 to decertify physicians who engage in
no-fault fraud. In recent years an increasing portion of the no-fault
fraud has been observed in the area of durable medical equipment
(DMF). In many instances the DME wholesaler is involved in the scam
and the provider is committing fraud in conjunction with the medical
supply companies. Many of these DME frauds occur in the following
manner.
Many items are subject to the fee schedule. Items not subject to the
fee schedule are billed at a rate of 50% profit. For example, TENS and
EMS machines (which emit electrical impulses) perform nearly the same
functions. Until last year TENS machines were not subject to the fee
schedule, so TENS and EMS billing was relatively equal. However, last
year TENS machines were put on the fee schedule. It is no coincidence
that no-fault fraudsters are reducing TENS billings and EMS billings
have dramatically increased so that those fraudsters can fabricate a
price and then add in the 50% profit on top.
As is readily seen by these cases, this area of no-fault fraud is
rampant and growing at a tremendous rate producing the fastest and
most cash profit of any fraud. Since January I, 2009, there have been
739 new DME providers registered in NYS. There were 340 new facilities
registered in Brooklyn alone but only 10 in Buffalo. In one especially
egregious case one patient's DME billing included 16 different items
totaling over 56,000 including a luxury turbo bath spa an infrared
heat wand, a wand massager, two different post-op knee braces a back
support seat, a TENS belt and others. The patient reports that they
never used any of the items which were billed for.
LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act will sake effect on the 180th day after it shall have become
a law.

S T A T E O F N E W Y O R K
________________________________________________________________________
7787
I N S E N A T E
June 18, 2012
___________
Introduced by Sen. SEWARD -- read twice and ordered printed, and when
printed to be committed to the Committee on Rules
AN ACT to amend the insurance law, in relation to limits on certain
supplementary insurance; and in relation to payments to durable
medical equipment providers
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph 2 of subsection (f) of section 3420 of the insur-
ance law, as separately amended by chapters 547 and 568 of the laws of
1997, is amended to read as follows:
(2) (A) Any such policy shall[, at the option of the insured, also]
provide supplementary uninsured/underinsured motorists insurance for
bodily injury[, in an amount up to] IN THE SAME AMOUNT AS the bodily
injury liability insurance limits of coverage provided under such AUTO-
MOBILE INSURANCE policy[, subject to a maximum of two hundred fifty
thousand dollars because of bodily injury to or death of one person in
any one accident and, subject to such limit for one person, up to five
hundred thousand dollars because of bodily injury to or death of two or
more persons in any one accident, or a combined single limit policy of
five hundred thousand dollars because of bodily injury to or death of
one or more persons in any one accident. Provided however, an insurer
issuing such policy, in lieu of offering to the insured the coverages
stated above, may provide supplementary uninsured/underinsured motorists
insurance for bodily injury, in an amount up to the bodily injury
liability insurance limits of coverage provided under such policy,
subject to a maximum of one hundred thousand dollars because of bodily
injury to or death of one person in any one accident and, subject to
such limit for one person, up to three hundred thousand dollars because
of bodily injury to or death of two or more persons in any one accident,
or a combined single limit policy of three hundred thousand dollars
because of bodily injury to or death of one or more persons in any one
accident, if such insurer also makes available a personal umbrella poli-
cy with liability coverage limits up to at least five hundred thousand
dollars which also provides coverage for supplementary
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.

LBD15532-07-2
S. 7787 2
uninsured/underinsured motorists claims]. THE COVERAGE REQUIRED UNDER
THIS PARAGRAPH IS NOT APPLICABLE WHEN, OR TO THE EXTENT THAT, AN INSURED
NAMED IN THE POLICY MAKES A REJECTION OF THE COVERAGE ON BEHALF OF ALL
INSUREDS UNDER THE POLICY. SUCH REJECTION SHALL BE MEMORIALIZED BY THE
INSURER THROUGH A SIGNED WRITING, AUDIO RECORDING, ELECTRONIC SIGNATURE
OR ANY OTHER MEANS EVIDENCING THE INSURED'S REJECTION OF SUCH COVERAGE.
Supplementary uninsured/underinsured motorists insurance shall provide
coverage, in any state or Canadian province, if the limits of liability
under all bodily injury liability bonds and insurance policies of
[another] ANY OTHER motor vehicle liable for damages are in a lesser
amount than the bodily injury liability insurance limits of coverage
provided by such policy. Upon written request by any insured covered by
supplemental uninsured/underinsured motorists insurance or his duly
authorized representative and upon disclosure by the insured of the
insured's bodily injury and supplemental uninsured/underinsured motor-
ists insurance coverage limits, the insurer of any other owner or opera-
tor of another motor vehicle against which a claim has been made for
damages to the insured shall disclose, within forty-five days of the
request, the bodily injury liability insurance limits of its coverage
provided under the policy or all bodily injury liability bonds. The time
of the insured to make any supplementary uninsured/underinsured motorist
claim, shall be tolled during the period the insurer of any other owner
or operator of another motor vehicle that may be liable for damages to
the insured, fails to so disclose its coverage. As a condition precedent
to the obligation of the insurer to pay under the supplementary
uninsured/underinsured motorists insurance coverage, the limits of
liability of all bodily injury liability bonds or insurance policies
applicable at the time of the accident shall be exhausted by payment of
judgments or settlements.
(B) [In addition to the notice provided, upon issuance of a policy of
motor vehicle liability insurance pursuant to regulations promulgated by
the superintendent, insurers shall notify insureds, in writing, of the
availability of supplementary uninsured/underinsured motorists coverage.
Such notification shall contain an explanation of supplementary
uninsured/underinsured motorists coverage and the amounts in which it
can be purchased. Subsequently, a notification of availability shall be
provided at least once a year and may be simplified pursuant to regu-
lations promulgated by the superintendent, but must include a concise
statement that supplementary uninsured/underinsured motorists coverage
is available, an explanation of such coverage, and the coverage limits
that can be purchased from the insurer.] IF THE REJECTION OR SELECTION
OF LOWER SUPPLEMENTARY UNINSURED/UNDERINSURED MOTORISTS COVERAGE IS IN
WRITTEN OR ELECTRONIC FORM, THAT REJECTION OR SELECTION SHALL BE MADE ON
A FORM PROVIDED TO THE INSURED AT THE TIME THE POLICY IS SOLD, PURCHASED
AND/OR NEGOTIATED THAT SHALL FULLY ADVISE THE INSURED OF THE NATURE OF
THE COVERAGE AND SHALL STATE THAT THE COVERAGE IS EQUAL TO BODILY INJURY
LIABILITY LIMITS UNLESS LOWER LIMITS ARE REQUESTED OR THE COVERAGE IS
REJECTED. WHERE SUCH SELECTION OR REJECTION IS MADE VERBALLY, A MEMORI-
ALIZATION IN WRITING OR ELECTRONIC SIGNATURE MAY BE RECEIVED BY THE
INSURER SUBSEQUENT TO THE SALE, PURCHASE AND/OR NEGOTIATION OF THE POLI-
CY. THE FORM SHALL BE IN 12-POINT BOLD TYPE AND SHALL STATE: "SUPPLE-
MENTARY UNINSURED/UNDERINSURED MOTORISTS COVERAGE (SUM COVERAGE)
PROTECTS AGAINST THE POSSIBILITY OF AN ACCIDENT INVOLVING ANOTHER MOTOR
VEHICLE WHOSE OWNER OR OPERATOR WAS NEGLIGENT AND WHO MAY HAVE NO INSUR-
ANCE WHATSOEVER; OR EVEN IF INSURED, IS ONLY INSURED FOR THIRD-PARTY
BODILY INJURY AT RELATIVELY LOW LIABILITY LIMITS, IN COMPARISON TO THE
S. 7787 3
POLICYHOLDER'S OWN LIABILITY LIMITS FOR BODILY INJURY SUSTAINED BY
THIRD-PARTIES. BY PURCHASING SUM COVERAGE, THE POLICYHOLDER AND ANY
INSURED UNDER THE POLICY CAN BE PROTECTED FOR BODILY INJURY TO THEM-
SELVES AND RECEIVE FROM THE POLICYHOLDER'S OWN INSURER PAYMENT FOR BODI-
LY INJURY SUSTAINED DUE TO THE NEGLIGENCE OF THE OTHER MOTOR VEHICLE'S
OWNER OR OPERATOR. SUM COVERAGE SHALL BE EQUAL TO BODILY INJURY LIABIL-
ITY LIMITS UNLESS LOWER LIMITS ARE REQUESTED OR THE COVERAGE IS
REJECTED. A POLICYHOLDER IS URGED TO CONSIDER PURCHASING THE MAXIMUM SUM
COVERAGE AVAILABLE." IF REJECTION OR SELECTION OF LOWER LIMITS IS MADE
VERBALLY, THE INSURER OR THEIR AGENT SHALL READ THE IDENTICAL OR
SUBSTANTIALLY SIMILAR LANGUAGE AS IS IN THE ABOVE REJECTION OF MATCHING
LIMITS FORM AND CONFIRM THE CLIENT HAS HEARD AND UNDERSTOOD THE SAME,
AND SHALL RESTATE THE ABOVE INFORMATION AS OFTEN AS IS NECESSARY UNTIL
THE INSURED HAS VERBALLY CONFIRMED THAT THEY FULLY UNDERSTAND THE SAME.
THE INSURER SHALL NOTIFY THE NAMED INSURED AT LEAST ANNUALLY OF HER OR
HIS OPTIONS AS TO THE COVERAGE REQUIRED BY THIS PARAGRAPH PURSUANT TO
REGULATIONS ISSUED BY THE SUPERINTENDENT, IF ANY, AT THE TIME OF OR
WITHIN SIXTY DAYS PRIOR TO THE RENEWAL OF THE POLICY. RECEIPT OF THIS
NOTICE DOES NOT CONSTITUTE AN AFFIRMATIVE WAIVER OF THE INSURED'S RIGHT
TO UNINSURED MOTORIST COVERAGE WHERE THE INSURED HAS NOT SIGNED A
SELECTION OR REJECTION FORM.
S 2. The insurance law is amended by adding a new section 5109-a to
read as follows:
S 5109-A. UNAUTHORIZED PROVIDERS OF DURABLE MEDICAL EQUIPMENT. (A) THE
SUPERINTENDENT MAY PROHIBIT A PROVIDER OF DURABLE MEDICAL EQUIPMENT FROM
DEMANDING OR REQUESTING PAYMENT UNDER THIS ARTICLE FOR DURABLE MEDICAL
EQUIPMENT FOR A PERIOD TO BE DETERMINED BY THE SUPERINTENDENT IF THE
SUPERINTENDENT DETERMINES, AFTER NOTICE AND A HEARING, THAT THE PROVIDER
OF DURABLE MEDICAL EQUIPMENT:
(1) HAS ENGAGED IN A PATTERN AND PRACTICE OF FRAUDULENT, EXCESSIVE OR
UNLAWFUL BILLING OF INSURANCE COMPANIES FOR DURABLE MEDICAL EQUIPMENT;
(2) HAS ENGAGED IN A PATTERN AND PRACTICE OF BILLING INSURANCE COMPA-
NIES FOR DURABLE MEDICAL EQUIPMENT WHICH WAS NOT PROVIDED;
(3) HAS ENGAGED IN A PATTERN AND PRACTICE OF BILLING INSURANCE COMPA-
NIES FOR DURABLE MEDICAL EQUIPMENT WHICH WAS NOT NECESSARY;
(4) HAS COMMITTED A FRAUDULENT INSURANCE ACT AS DEFINED IN SECTION
176.05 OF THE PENAL LAW;
(5) HAS BEEN CONVICTED OF A CRIME INVOLVING FRAUDULENT OR DISHONEST
PRACTICES;
(6) HAS REFUSED TO APPEAR BEFORE, OR ANSWER ANY QUESTION UPON REQUEST
OF, THE SUPERINTENDENT OR ANY DULY AUTHORIZED OFFICER OF THIS STATE OR
REFUSED TO PRODUCE ANY RELEVANT INFORMATION CONCERNING THE CONDUCT OF
THE PROVIDER OF DURABLE MEDICAL EQUIPMENT IN CONNECTION WITH DURABLE
MEDICAL EQUIPMENT PROVIDED UNDER THIS ARTICLE; OR
(7) HAS VIOLATED ANY PROVISION OF THIS ARTICLE OR REGULATIONS PROMUL-
GATED THEREUNDER.
(B) A PROVIDER OF DURABLE MEDICAL EQUIPMENT SHALL NOT DEMAND OR
REQUEST PAYMENT UNDER THIS ARTICLE FOR DURABLE MEDICAL EQUIPMENT DURING
THE TERM OF THE PROHIBITION ORDERED BY THE SUPERINTENDENT PURSUANT TO
SUBSECTION (A) OF THIS SECTION.
(C) THE SUPERINTENDENT SHALL MAINTAIN A DATABASE CONTAINING A LIST OF
PROVIDERS OF DURABLE MEDICAL EQUIPMENT PROHIBITED BY THIS SECTION FROM
DEMANDING OR REQUESTING PAYMENT FOR DURABLE MEDICAL EQUIPMENT RENDERED
UNDER THIS ARTICLE AND SHALL MAKE THE INFORMATION AVAILABLE TO THE
PUBLIC.
S. 7787 4
(D) NOTHING IN THIS SECTION SHALL BE CONSTRUED AS LIMITING IN ANY
RESPECT THE POWERS AND DUTIES OF ANY OTHER STATE OR FEDERAL AGENCY OR
INSURERS TO INVESTIGATE INSTANCES OF MISCONDUCT BY DURABLE MEDICAL
EQUIPMENT PROVIDERS AND TAKE APPROPRIATE ACTION PURSUANT TO ANY OTHER
PROVISION OF LAW.
S 3. This act shall take effect on the one hundred eightieth day after
it shall have become a law, and shall apply to insurance policies and
contracts issued, entered into or renewed on and after such effective
date.

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